Tao Corporation

Final Paper
Presented to the
Decision Sciences and Innovation Department

In partial fulfillment
Of the course requirements
In SYSTHEO Section M71

SUBMITTED TO:
Dr. Cristina Lim

SUBMITTED BY: GROUP 3

Hernandez, Trisha
Lee, Gwan Woo
Pangan, Emmanuel
Panopio, Arman
Park, Hayeon

July 14, 2015

I.

INTRODUCTION
a. Company Profile
Back in 1995, Julio O. Sy, Jr. decided to deviate from his familys
commodity trading business and make something on his own. This desire took
form in Tao Commodity Trader, Inc., which specialized in trading molasses.
According to Mr. Sy, the business was very inconsistent in terms of profitability for
quite some time, in that he says some years they would do well, some years
they would do poorly. In fact, the company underwent (quoted from Mr. Sy) 2
crises that almost forced them to close the company. Mr. Sy then decided to
invite a friend who happened to be the president of one of San Miguel
Corporations largest subsidiaries to diagnosis his companys organizational
behavior. After 3 months of observing and interviewing his employees, this friend
invited him out for some drinks. As they were enjoying their beverages, he told
Mr. Sy that the primary problem his company faced was that he was (quoted from
Mr. Sy) a lousy manager.
He was told that he never trusted nor empower his employees, in that he
did not involve them in important decision-making processes, nor did he offer
them any sort of training. However, Mr. Sys employees did point out that he has
very good (quoted from Mr. Sy) entrepreneurial tendencies because they often
heard him speak of great ideas in this regard. What frustrated and upset him on
the onset simply led to the realization that his gift was not in managing
businesses, but in entrepreneurial ventures. This led to the decision to establish
Tao Corporation and bring in Tao Commodity Trader, Inc. as one of its
subsidiaries. Today, Tao Corporation has evolved to a holding company for a

community of entrepreneurial subsidiaries and affiliates. These subsidiaries

comprise of over 40 companies that delve into several industries, namely Healthy
and Wellness, Distribution and Marketing, Resources, and Financial Services. In
its short history, Tao Corporation has quickly risen to become one of the Top 100
Corporations in the Philippines (as mentioned earlier) that currently employs
approximately 3,000 individuals. It is amazing how much one can achieve with
some constructive criticism and humility, which is embedded in one of Tao
Corporations core values.
For the operations within the Tao Corporation holding company, the daily
regimen for every department is carrying out different tasks and deliverables in
light of meetings that occur on different schedules. On a weekly basis, there are
Working Management Committee Meetings, wherein the heads of the different
departments or functional directors meet and discuss updates regarding the
progress of deliverables, as well as issues and concerns that different
departments face. On a monthly basis, there are Full Working Management
Committee Meetings, wherein the department heads together with their
subordinates meet and discuss similar matters. Also on a monthly basis are
Consolidated Business Review Meetings, wherein the functional directors (and
at times with next-level managers) meet with the Chairman of the Board and
President of the company to discuss bring them up to date on such matters.
Regarding operations that involve subsidiaries and affiliates, the Finance
Department of Tao Corporation meets with a representative of each subsidiary
for one hour, once every month to discuss how they are doing financially, as

well as factors that hinder certain partner companies from their goals. Basically,
the primary purpose of the holding company is to monitor and evaluate the
performance of its subsidiaries and affiliates and more importantly, assist them
to achieve profitability. These meetings aim to give Tao Corporation the
necessary information to perform its aforementioned purpose.
As a whole, these company functions aim to shape the construction of
deliverables that will be set for the different departments of Tao Corporations
to accomplish.

b. Organizational Structure

The organizational chart of Tao Corporation is what the Corporate HROD

Director Anna Asuncion termed as flat, perhaps due to the low height or number
of hierarchical levels in an organization. There are 4 levels in the holdings
company and given that there are only 50 employees, the span of control or the
number of individuals a manager oversees is not very large. In terms of

departmentalization or the process of grouping of human and other resources

into units, there are 7 departments, namely Corporate Planning, Finance, Internal
Auditing, Manufacturing and Operations, Legal Counsel, Human Resources and
Organizational Development, and Strategic Business Development.

The corporate hierarchy starts with the Chairman with his Board Members and
the President in one level. Below them are the functional directors or the heads
of the aforementioned 7 departments, which subsequently oversee middle
managers and their associates. Tao Corporation is democratic. The company
empowers their employees by involving them in decision-making processes. In
constructing deliverables to be accomplished by the different departments, the
company involves its functional directors by accepting their inputs. Although there
are set deadlines, Tao Corporation also gives its employees the freedom as to
how they plan to accomplish the said deliverables.
Brief Description/Functions of each department:
CORPLAN Corporate Planning
Implementation of a work-plan development, setting of appropriate performance
and service standards and develop appropriate KPIs at the corporate and departmental
levels to track key performance areas. Develop and implement relevant performance
management and reporting systems and business analytics processes to track
corporate performance and strategy implementation. Evaluate performance and
highlight areas of attention to top management in a timely manner. Recommend and

monitor appropriate remedial actions to ensure organizational performance standards

and service quality are maintained.
CHIEF FINANCE OFFICER Finance
The Chief Finance Officer as well as the financial department for Tao Corporation is
responsible for all the managing of the cash inflows and outflows as well as the
bookkeeping and accounting of their data. Being a holding company, the finance
department is crucial to the company in terms of its income and expenses.
INTERNAL AUDIT DIRECTOR Internal Audit
The role of internal audit is to provide independent assurance that an
organization's risk management, governance and internal control processes are
operating effectively.
MANUFACTURING AND OPERATIONS DIRECTOR Manufacturing and
Operations
The roles of this department are separated into two. The initial manufacturing
and operations, and security. The initial manufacturing and operations sector is
responsible for the current business functions in Tao Corporation. Security is
responsible for their keeping of data and information about the company and its
processes. The managers in these departments report to the department head/director.
LEGAL COUNSEL Legal
The legal counsel is responsible for the companys legal processes and activities,
as well as compliances with their policies, including government.
CORP HROD TEAM Corporate Human Resources and Organizational
Development

The CORP HROD department is responsible for their human resources which
includes recruitment, hiring, counselling, and so on. For the Organizational
Development area, they are responsible for maintaining and improving the
organizational relations and behaviors of the corporation.
STRAT. BUS. DEVT. HEAD Strategic Business Development
This department is responsible for the companies focuses on improving their
operations and their processes. The main goal for this department is to assist the
company in innovating for their growth.
c. Products and Services

The formula Mr. Sy has followed throughout the years is simple: to find
entrepreneurial ventures with potential, equip these ventures with good leaders, and
train these leaders to be further develop and hone their skills.

As a result, the company has already accomplished a wide array of

successful business ventures in its short history (evident from illustration above). In
the Health and Wellness industry, Tao Corporation is the exclusive and authorized

distributor of healthcare brands such as 3M, GE Vital Signs, Siemens, Philips, and
many others through its HealthSolutions subsidiary. Total Nutrition Corporation is
another notable venture, being the exclusive franchisee of General Nutrition Center
(GNC Live Well) in the Philippines. It can be argued that the companys strong suit is
in its Distribution and Marketing group of subsidiaries. Through JR&R Distributors
Inc., Macro Distributors, Inc., and Oro Grande Distributors Inc., the company
contributes 31% to total Proctor & Gamble business in Philippines, providing their
goods in numerous provinces nationwide. This led to P&G recognizing them as
Best in Class Distributors back in 2006. In addition, TriDharma Marketing
Corporation is the exclusive national distributor food and drink brands such as
Kopiko, Beng-beng, Energen, and many others. Tao Corporation also delves into
electronics and communication technology products. Among these are Altus
Communications

and

Open

Communications,

Inc.,

which

are

subsidiaries

responsible for exclusively distributing Nokia and Lenovo mobile phones respectively
in the Philippines.
Also, ThinkDharma Inc., is one of the companys newest and most promising
subsidiaries, currently being the exclusive distributor of Nikon cameras and other major
brands. In the Resources industry, Tao Commodity Trader, Inc. has become the largest
trader of molasses in the country, constituting 35% of the market share, in addition to
other commodities such as fuels, lubricants, and liquid feeds. With regards to its
affiliates, one example is Radio Republic, a company focused on championing Original
Philippine Music (OPM) using both an online music channel and magazine as their
platforms. Its activities bring the virtual into the real throughMusic Festivals and

Tours.
These are a merely a few of Tao Corporations many subsidiaries and
affiliations. However, one aspect that truly sets the company apart from others in its
calibre is the emphasis it puts on helping others. Embedded in its vision and mission
statements, the company moves forward with the belief that in order to find true
meaning and fulfilment in ones work, positive contributions must be made to the lives
of others. Such an idea is concretized by TaosPuso, Tao Corporations foundation. The
TaosPuso foundation reaches out to those in need primarily by providing libraries and
multimedia rooms to schools, responding to the needs of calamity-ridden, areas and
discovering and enhancing local artistry in music through its various programs.
d. Problem, parameters and limitations
The Problem:
Increased Workload due to Downsizing
Parameters and Limitations of the Situation:
Only Corporate Planning, Finance, and Human Resources and
Development are given access to by the company.
II.

OVERVIEW
The company is successful, being one of the Top 100 Corporations in the

Philippines. Currently, Tao Corporation aims to expand and has a confidential project of
having their main business, which is Distribution and Marketing, become more efficient
and be able to gain competitive advantage among other holding companies. The case
study will be presenting what actions are to be done in case other companies choose
downsizing as one of their options to meet their goals. It will also be presenting the

effects of corporate downsizing to the retained employees. Initially having 90 employees

in their management, after downsizing, the company had only retained 50 employees.
Considering that the company has a goal of gaining competitive advantages, Tao
Corporation has concluded that the 40 they relieved of duties are not contributing to the
goals as compared to the 50 they have retained. Because of the downsizing, the
remaining 50 employees have been experiencing increased workload and the increased
difficulty of the work itself.
III.

ANALYSIS
Tao Corporation has recently downsized early February 2015 regarding its

managerial team in the head office. The company wants to gain competitive advantage
and has concluded that downsizing would be one of the best options to meet this goal.
The key people involved are the people in each managing department. The company
did not mention how many people per department were removed, but that each
department was affected with evaluation.
Because of this downsizing, the remaining employees have been complaining
about overworking and the increased difficulty added to their workload. Initially, the
company begins operations at 8:30 AM and ends at 5:30 PM. However, due to the
recent downsizing, some employees now continue working as far as 8:00 PM.
According to the company, proper overtime rates are added to the salaries whenever
overtime shifts are being done by the employees. The group assumes that since there
are complaints arising, it may be that the employees are not satisfied or contented with
the current increases. It may also be assumed that due to the increased workload and
difficulty, the employees are becoming more and more stressful as the days go by.
There is also an unrealistic scheduled demand, according to the employees. Currently,

they are blaming their respective managers because of their poor planning of the
distribution of each of their departments workloads
IV.

Problem Definition-History
The specific problem being addressed is the employees complaints of increased

workload and difficulty of the tasks involved in their work. There have been increasing
concerns regarding the working environment and conditions. According to the interview
with their HROD Director, despite not having a big percentage of the employees
involved in this concern, they are worried that in the long run, it may increase and get
worse.
The problem occurs because there are currently dissatisfied employees with the
benefit that they are receiving due to the changes that happened with the company. The
impact is being felt majorly with the Manufacturing and Operations Department and the
Corporate Human Resources and Organizational Development Departments. This is
because of the pressure being added to them on how these respective departments
would be able to manage the current negative effects of the companys recent
downsizing and the following changes
V.
Proposed Action & Resolutions
Better Employee Compensation
- Higher Salaries since employees had an increase in workload
Despite the companys claims that Tao Corporation provides the proper overtime
rates towards their employees, their employees somehow disagree. The group was not
informed with the current salaries the employees receive due to confidentiality, however
the group does know that on a managerial level, the salaries of the managers would
begin in the high-five digits to a medium-level six digit salary. The group also knows that
an increase of 30 percent towards the hourly rate of their salary should be the overtime
pay that the employees receive.
- Free Snacks after work to help maintain employee health

Another tactic to coping with stress is through proper dieting practices. Having a
proper diet affects energy, alertness, and overall well-being. According to Cooper
Institute, four key areas should be considered. First it is important to monitor fat intake,
second is to consume a reasonable amount of fiber both insoluble and soluble, third
calcium consumption is important, fourth is consumption of foods in antioxidants can
serve helpful.
It is important that the company promotes healthy diets to increase energy levels
and for employees to cope with stress better. This is done through implementing
healthier choices in office cafeterias and taking out the junk food found in vending
machines. It is a costly investment, but it is worth it when you consider that employees
of Tao Corporation is suffering from an immediate shock of increased demand of
workload.
-

Exercise Activities before ending of lunch to help keep the employees active

both mind and body

One of the most important tactics is to promote regular exercise. Under regular
exercise, it is important to work on endurance, strength and flexibility. Key activities
include regular walking, treadmill walking, jogging, running, cycling and swimming.
Flexibility activities maintain or improve range of motion and energy. Through constant
exercise, the employees are able to release stress physically and are able to stretch out
their muscles. In a study done by the Mayo Clinic Staff, they mention that exercise can
pump up your endorphins because physical activity helps to bump up the production of
your brains feel-good neurotransmitters, called endorphins. Second, it is meditation in
motion meaning that you will often find yourself forgetting about the days irritations after
going through a workout as your body concentrates on its own movements. As you

being to regularly shed your daily tensions through movement and physical activity, you
may find that this focus on a single task, and the resulting energy and optimism can
help you remain calm and clear in everything that you do. Lastly, it improves your mood
because regular exercise can increase self-confidence and lower the symptoms
associated with mild depression and anxiety. Exercise also improves your sleep which,
when uninterrupted, can ease your stress levels and give you a sense of command over
your body and your life.
This is why you normally see gyms in companies so that when employees are
stressed, they can take time to work out and release the stress. We propose that the
company set up a similar structure to serve as an avenue for employees to release their
stress due to an overload of work.
References:
Stress Management. Exercise and Stress. Mayo Clinic Staff. Retrieved July 14, 2015
from http://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/exerciseand-stress/art-20044469
Chambliss HO, Huber RC, Finley CE, McDoniel SO, Kitzman-Ulrich H, Wilkinson WJ
(February 4, 2011). Computerized self-monitoring and technology assisted feedback for
weight loss with and without an enhanced behavioral component. Patient Education
and Counseling, doi:10.1016/j.pec.2010.12.024
Tao Corporation. Retrieved July 14, 2015 from http://www.taocommunity.com/home